Around 50 local investors have expressed their concerns about what they consider an increasingly unfavorable tax environment and expensive loans that are negatively affecting their businesses.
These investors shared their grievances during a stakeholder meeting led by Col Edith Nakalema, the head of the State House Investor Protection Unit, held at her office in Kampala. They pointed fingers at the Uganda Revenue Authority (URA) and the Bank of Uganda, claiming that these entities were at the heart of their struggles and the premature demise of their businesses.
Thaddeus Musoke, the chairperson of the Kampala City Traders Association (Kacita), revealed that many Ugandan businesses are finding it challenging to secure financing from commercial banks due to high interest rates ranging between 18 percent and 23 percent. He cited his personal experience, stating that he had spent nine months processing a loan of Shs500 million, investing Shs15 million in the process, but receiving only Shs300 million from the bank.
The continuous imposition of taxes on a small segment of Ugandan entrepreneurs by the URA, according to Mr. Musoke, has contributed significantly to the downfall of local investments.
Similarly, John Walugembe, the chairperson of the Federation for Small and Medium Enterprises, asserted that the government’s relentless pressure on small businesses has forced many of their members to shut down.
Col Nakalema initiated the meeting in response to public outcry from local investors who had submitted multiple petitions, alleging that government agencies, instead of supporting their growth, were stifling their enterprises.
She mentioned that a majority of investors had raised concerns about the stringent requirements imposed by commercial banks, which prevented them from accessing the Agriculture Credit Facility (ACF) and the Small Businesses Recovery Funds introduced by the Bank of Uganda to assist local investors.
Government officials present at the meeting assured the concerned investors that the government is committed to improving the investment climate.
John Musinguzi, the Commissioner General of URA, Moses Kaggwa, the acting Director of Economic Affairs at the Ministry of Finance, Planning, and Economic Development, Richard Byarugaba, the Executive Director in charge of Finance at Bank of Uganda, and representatives from the Uganda Registration Services Bureau and Uganda National Bureau of Standards, among others, emphasized the government’s recognition of the importance of these issues for the country’s development.
Jacob Kabondo, the National Coordinator of Uganda Millers Association, accused these institutions of hindering their progress while simultaneously imposing hefty taxes. He lamented that their industry was suffering, with export times increasing from three containers a week to three weeks for a single container.
Various stakeholders, including millers, the fish industry, e-trade, and Uganda women entrepreneurs, also raised concerns during the meeting.
In response to the investors’ grievances, Mr. Musinguzi announced that the tax body would implement several reforms aimed at addressing their concerns.
Mr. Byarugaba acknowledged the low uptake of the Small Business Recovery Fund, stating that the challenge of commercial banks not disbursing funds to applicants was being addressed.
Mr. Kaggwa mentioned that the government would hold a meeting early in the month to evaluate the impact and success of all its livelihood programs and determine where to focus additional efforts.
